State questions TZB funding strategy

Sunday

Mar 3, 2013 at 2:00 AMMar 3, 2013 at 1:43 PM

ALBANY — In the absence of a concrete financial plan, the New York State Thruway Authority has resorted to borrowing money to make a "mobilization" payment on the $3.1 billion contract to replace the Tappan Zee Bridge.

Judy Rife

EDITOR'S NOTE: The owner of the proposed project was incorrectly identified in a headline on the story published Sunday.

ALBANY — In the absence of a concrete financial plan, the New York State Thruway Authority has resorted to borrowing money to make a "mobilization" payment on the $3.1 billion contract to replace the Tappan Zee Bridge.

This continued uncertainty about how the authority will pay for the new bridge, now that a contract has been awarded and construction is about to start, has caused the state comptroller's office and others to question the agency's strategy.

"It is essential that the authority move forward with the project in an atmosphere of transparency and accountability," said Pete Grannis, the first deputy comptroller, in a letter to the agency. "Transparency demands that the authority make public a full financing plan, including the expected level of tolls, as soon as possible."

The authority, for its part, has repeatedly said that the financial plan will consist of a low-interest loan from the federal government and toll-backed bonds — and will be fleshed out when it learns the size of the so-called TIFIA loan that it expects to receive. The agency, which sought one of the highly-competitive loans a year ago to no avail, tried again in August and asked for the maximum amount — 49 percent of a project's cost.

"We knew that the TIFIA process would take time," said Dan Weiller, a Thruway Authority spokesman. "We are receiving encouraging news from TIFIA — discussions are ongoing — and we are confident that the new bridge project will receive substantial TIFIA support."

The U.S. Department of Transportation, however, has not asked the authority to follow its August letter of interest with a formal application and a $100,000 check to cover the cost of further evaluation. In fact, none of the 28 agencies that want $14 billion in loans from the two-year pot of $1.75 billion that Congress authorized in July has been asked to submit applications.

"We are reviewing each of the letters of interest and advancing them through our process based on a timeline that makes sense for the particular project," said Bill Adams, a DOT spokesman.

Neither Weiller nor Adams would expand on why the Thruway Authority is confident a loan will be forthcoming or when the process will play out.

With a ceiling of 49 percent, the size of the loan that the authority is seeking is likely just shy of $2 billion, since administrative costs will add as much as $800 million to the project's cost. The current interest rate for TIFIA loans, which have generous repayment terms, is 3.08 percent.

In the interim, the Thruway Authority has sold $500 million worth of bond-anticipation notes to move the project forward, starting with a $125 million mobilization payment to Tappan Zee Constructors, the company that will design and build the new bridge.

The notes, privately placed with Barclays Capital at 0.189 percent to avoid the time and expense of a public sale, will mature July 31. The authority, which is counting on repaying the notes with TIFIA proceeds, has the option to borrow an additional $200 million and push the maturity date to Sept. 30.

The Tri-State Transportation Campaign reacted to the short-term borrowing with another call for the Thruway Authority to be more forthcoming about its financial plan, since having one is a basic requirement for a TIFIA loan.

"Without a financial plan," said the Campaign in a statement, "there is no way to know what assumptions about funding have been made and what will happen if those assumptions are wrong."

Grannis signed off on the note sale for the Comptroller's Office but warned the authority that it "must be forthright "» on the overall impact these costs may have on tolls that Thruway customers will shoulder, not only for use of the new bridge but for the totality of the Thruway system."

Gov. Andrew Cuomo's office and the Thruway Authority have promised to appoint an advisory committee on tolls.

They have also talked about retaining frequency discounts for commuters, adopting new discounts for Rockland and Westchester residents, and raising the TZB toll from the current $5 to a future $14.

"But what if the (TIFIA) loan amount is less than expected?" asked the Campaign.